Pros and Cons of Solar Panels

1/16/2024

If you're thinking of getting solar panels, you are probably considering them for two main reasons - reducing your carbon footprint and saving money on your energy bills. The solar industry certainly pushes these as the biggest reasons to "go solar." But the reality may not be that simple. Let's look at both the pros and cons of solar energy for homeowners.

Pros:

Clean, Renewable Energy: One of the most significant advantages of solar panels is their ability to generate clean energy and renewable energy. Solar power is harnessed from the sun, a virtually limitless and sustainable source, reducing our reliance on finite fossil fuels. Solar energy is environmentally friendly, minimizing greenhouse gas emissions compared to traditional energy sources, like natural gas, and reducing one's carbon footprint.
Energy Savings: Your electric meter tracks production versus usage, potentially resulting in lower bills or even credits during high-usage months.
Low Operating Costs: Once installed, solar panels have relatively low operating and maintenance costs. They require minimal attention, with routine cleaning and occasional checks being the primary upkeep tasks.
Energy Independence: Solar panels provide an opportunity for energy independence. By generating electricity on-site, individuals can reduce their reliance on centralized power grids, ensuring a more resilient and self-sufficient energy supply.
Incentives and Rebates: Governments around the world often provide incentives, rebates, and tax credits to encourage the adoption of solar energy. These financial benefits can significantly offset the initial costs of installing solar panels, making them more accessible to a broader range of consumers.

Cons:

Clean, Renewable Energy?: The production of solar panels involves the use of rare earth elements and other materials, some of which are finite resources. Because of this, the manufacturing impact significantly negates the good we are doing in using renewable energy. Also, panels have a lifetime of approximately 25-30 years, though they lose .5%-1% of their power each year. Once they need to be replaced, they become solid waste, again offsetting the good we've done in using renewable energy. Consider the full environmental impact before committing to a solar energy system for your home.
Low Operating Costs?: Panels are certified to withstand 1" hail and 140 mph winds. A Category 4 or 5 hurricane, as well as severe hailstorms, may damage your solar panels, though storms of that magnitude may also do damage to your roof and other parts of your house. Panel performance warranties typically last 25 years, but equipment warranties are often only 12 years. Inverters, which are likely to fail first, usually have a 10-year warranty with an option to extend to 25 years. Batteries (more on that in a moment) generally have a 10-year warranty. Once you're out of warranty, those items may be costly to replace.
Energy Independence? Solar energy production is dependent on sunlight, which can be intermittent due to weather conditions and time of day. You'll also need to consider if your home is facing the most effective direction (south-facing in direct sunlight is best) and how much shade is caused by trees and surrounding buildings. This intermittency requires the integration of energy storage solutions or backup power sources to ensure a consistent energy supply. Also, the power your solar panels generate is typically fed into the grid, not directly to your home. During a power outage, solar-powered homes may still be without electricity unless batteries are installed, and sadly, batteries come at an additional cost of $13,000-$20,000. These batteries may only power essential appliances for a limited time, similar to a generator.
Incentives and Rebates?: Do your own research on government websites regarding rebates available and consult your accountant regarding the tax incentives available, as solar companies may provide outdated or not completely accurate information regarding these opportunities to offset your initial costs.
High Initial Costs: Speaking of initial costs, the upfront cost of purchasing and installing solar panels can be a significant barrier for many homeowners. Although prices have decreased in recent years, the initial investment remains challenging.
Solar Loan Options: Home Equity Line of Credit (HELOC) and Solar Loan Companies offer financing alternatives. HELOCs use your home as collateral, with potential tax deductibility. Solar Loan Companies may have high origination fees but offer lower interest rates.
Avoid Leasing!: Leasing most likely will not provide a tax credit, can result in a lien on your house, and often involves escalating payments. Panels may be removed at the end of the lease, leaving a roof that needs to be replaced, so carefully review lease agreements.
Insurance and Roof Warranties: Check with your homeowner's insurance to ensure coverage for solar panels (many policies do not cover solar panels), and know that some roof warranties may be voided with solar panel installations.
Net Metering and Buyback Plans: Net metering allows residents to sell excess power back to their energy provider. Compensation varies by state and provider, with some offering 50-75% buyback or less.
Home Infrastructure Considerations: Prior to installing solar panels, consider the condition of your home's infrastructure. Make sure your roof is relatively new, as replacing a roof once solar panels are installed is much more time-consuming and costly. Making sure your HVAC system is new and energy-efficient, as well as addressing insulation and window efficiency can prevent the need for an excessively large solar panel system.
Selling Your Home With Solar Panels: Selling your home within 10 years of installing solar panels may not yield a return on investment. Keep records of contracts and electric bills (both before installation of solar panels and after to prove energy savings), and, before listing, ensure the solar company is still in business. Also know that many buyers do not want a home with solar panels, so you may lower your buyer pool by adding solar panels. And if you have a loan on your solar panels that you are still paying, you will most likely need to pay off that loan at closing, as some loans are not assumable and some buyers are not qualified to assume the loan, even if the buyer is willing to assume it. As for added value, appraisers will most likely provide only around $5,000 in value for owned solar panels during home appraisals (for leases, the value is $0).

Harnessing the sun's energy sounds like a dream come true, and in some cases, it is! But investing in solar panels involves a careful balancing act between the environmental benefits, financial benefits, and practical considerations for your home. Understanding the nuances and potential challenges associated with solar power ensures that you make an informed decision that aligns with both your energy and financial goals.

For homeowners who want to make a long-term investment and plan to stay in their home for 20 or more years, solar panels may be a great idea. For others, it may not.

I want to "go green" and slow climate change as much as anyone, but I have to consider how the manufacturing and disposing of solar panels impacts the environment as a whole. For now, the overall environmental impact, the high initial cost, the added holes in the roof, the lack of added property value, and the relatively short lifespan of solar panels has me holding off on jumping on the solar panel bandwagon. Will things change in the coming years? Yes, hopefully in the near future. Until the advantages of solar energy technology surpass the drawbacks, I'll recycle, repurpose, buy thrifted items, watch my water usage... and pay my electric bill.

If you do decide to add solar panels to your home, make sure you choose a reputable solar company, research the best energy providers who will give you the best buyback plan, keep all your records, apply for your federal solar tax credit, pay for the panels outright or take out a loan (do not lease!), invest in batteries to store your energy, and stay on top of warranty end dates.

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